The National Health Council held a Briefing on Essential Health Benefits (EHB) on August 3, 2011. This is a presentation about an actuarial analysis of a possible EHB plan and its out-of-pocket costs from the perspective of a patient with a chronic disease.

1. Essential Health Benefits /An Actuarial Assessment of Health Insurance Coverage August 3, 2011 Kelly Brantley Avalere Health LLC

2. The ACA Requires Plans to Cover Minimum Essential Benefits and Places Limits on Cost Sharing The ACA creates 10 categories of essential benefits that plans must cover beginning in 2014: The essential benefits requirements also places limits on patient costs Limits out-of-pocket costs to Health Savings Account (HSA) levels (in 2011, $5,950 for individuals) Limits deductibles for small group plans to $2,000 for individuals and $4,000 for families

3. Initial Engagement with NHC Resulted in Development of Value Statements on EHB Goal: Ensure that people with chronic conditions have access to affordable and high-quality services and treatments necessary for prevention, diagnosis and management of their health condition

6. Platinum (90% of covered charges are paid by the plan)

7. Gold (80% of covered charges are paid by the plan)

8. Silver (70% of covered charges are paid by the plan)

9. Bronze (60% of covered charges are paid by the plan)Note: Actuarial value (AV) equals the ratio of benefits paid to covered charges for a reference set of covered services FEHBP = Federal Employees Health Benefits Package BCBS = Blue Cross Blue Shield

12. Modified deductibles, coinsurance, out-of-pocket maximums, and set copayments to illustrate how benefits may differ within same actuarial valueSource: Actuarial analysis performed for NHC by Actuarial Research Corporation and Avalere Health

14. Analysis resulted in an average monthly premium of $337 individual/$833 family for a benefit plan that would approximate a silver plan using the EHB model

15. Under the ACA, individuals/families up to 400% FPL would receive a premium tax credit on a sliding income scale basis linked to the silver plan

16. At 400% FPL, premiums as a percent of income would be capped at 9.5% ($345 individual/$708 family per month)

17. Above 400% FPL, there is no premium tax credit

18. The results of the analysis also show that benefit design, even within an actuarial value category, can vary substantially

19. For this reason, it will be critical for patients to enroll in a plan that works with their health care usage patterns

20. For example, a person with a chronic condition who has high healthcare expenses may consider a plan with a lower out-of-pocket limit, even if the deductible or other early out-of-pocket spending is higher than other plans FPL = Federal Poverty Level Source: Actuarial analysis performed by Actuarial Research Corporation and Avalere Health

21. At 250% FPL, a Family of Four with One Person with Kidney Disease * The median percentage of a budget assigned to necessities was estimated by Gruber and Perry, April 2011. ** The ACA sets threshold levels for maximum premiums, above which people will receive subsidies. At 250% FPL, the maximum premium is 8.1% of income. *** The ACA sets reduced out-of-pocket maximums for people with limited income. A Rand study estimated total out-of-pocket spending related to kidney disease was nearly $9,000 in 2004.

22. At 450% FPL, an Individual with Rheumatoid Arthritis * The median percentage of a budget assigned to necessities was estimated by Gruber and Perry, April 2011. ** The actuarial analysis estimated an annual premium of approximately $5,205 for a platinum plan for an individual. At this level of income, there is no premium subsidy. *** The ACA sets the standard OOP Maximum at $11,900. At this level of income, there is no subsidy for the OOP Maximum. A Rand study estimated total out-of-pocket spending related to rheumatoid arthritis was around $4,800 in 2004.